By Jon Peterson
Irvine, Calif.-based Panattoni, one of the west coast’s most prominent industrial development companies, has placed on the market for sale its 400,340 square foot industrial building in Lodi located at 1170 South Guild Avenue, according to sources familiar with the property. The industrial sector of the commercial real estate industry has been one that has fared the best since the onslaught of the COVID-19 pandemic, and occupancy remains very high.
Pricing guidance on the sale of the property could not be determined at this time.
Panattoni has chosen CBRE National Partners to be the listing agent on the sale of the property. Those involved in the sale include Rebecca Perlmutter, executive vice president at the firm’s San Francisco office, and Darla Longo, vice chairman/managing director who works out of the firm’s Los Angeles office. CBRE declined to comment when contacted for this story.
The projected cap rate on the sale will likely be in the 5.25 percent to 5.5 percent range, according to sources that track the sale of industrial assets in the Central Valley. This return is based on the property’s current net operating income.
Panattoni just recently completed the development of this asset. The building was constructed as a build-to-suit for Vaz Brothers Inc., a company that is involved in the distribution of bottled wine. This tenant has a 12-year lease in the property with annual rent increases of 2.5 percent. The renewal options are three 6-year options to extend at the greater of 100 percent of fair market value or rent at the expiration of the previous term.
Vaz Brothers is investing approximately $8 million to $9 million of its own capital into the physical improvements to the property like racking and packaging equipment. The industrial asset is located on a parcel that measures 21.52 acres. There is also an office component in the property, which totals around 3,200 square feet. Parking at the facility is included for 91 cars and 75 trailers.
The asset in Lodi is part of the Central Valley industrial submarket, which has had strong demographics overall. It has produced 8.5 percent average rental rate growth since 2014, according to sources that track industrial assets across the region. Net absorption in this submarket for 2019 reached 7.6 million square feet. This set a new record beating the old record of 7.5 million square feet that was established just a year earlier in 2018.